In Palmer v. Regents of the University of California, 107 Cal. App. 4th 899 (2003), a California appellate court recently upheld dismissal of a former employee's whistle blowing claim because the employee had failed to fully avail herself of either of two internal grievance procedures. The employee sought to bring a common law claim for wrongful termination in violation of public policy. In dismissing the claim against the public employer, the appellate court noted that when "Â…a private association or public entity establishes an internal grievance mechanism, as the regents had done, failure to exhaust those internal remedies precludes any subsequent private civil action." (107 Cal. App. 4th at 904.)
Internal Grievance Policies Distinguished from External Requirements
The Palmer court distinguished this case from the California Supreme Court's decision in Rojo v. Kliger, 52 Cal. 3rd 65 (1990), where the Supreme Court held exhaustion of FEHA administrative remedies was not required prior to bringing a claim for wrongful termination in violation of public policy against sex discrimination. The Palmer court reasoned that internal exhaustion requirements have a greater purpose than the external exhaustion requirements at issue in Rojo. An internal grievance mechanism "serves the salutary function of eliminating or mitigating damages. If an organization is given the opportunity quickly to determine through the operation of its internal procedures that it has committed an error, it may be able to minimize, and sometimes eliminate, any monetary injury to the plaintiff by immediately reversing its initial decision Â…; an individual should not be permitted to increase damages by foregoing the available internal remedies." (107 Cal. App. 4th at 904.)
What Type of Policies and Procedures Will the Courts Recognize As a Defense?
It remains unclear as to the extent of policies and procedures the court will deem sufficient to create a defense to a common law claim for wrongful termination. Most likely the courts will give greater deference to employers' grievance procedures where employees have the right to present witness testimony and other evidence, where a record is made of any proceedings and where there is an internal right of appeal.
What This Means for Employers
Employers with internal grievance policies and procedures that provide a fair hearing may be able to avoid common law claims for wrongful termination where an employee fails to exhaust these remedies. Even if an employee does take full advantage of these policies and procedures, advantages may still exist for the employer. The employer may be able to persuade the employee that a particular decision is fair based on this process, reverse a decision quickly it realizes is unfair before damage occurs, or simply better prepare itself for litigation that might ultimately result. Also, a jury may be more likely to conclude that the employee was treated fairly if the matter proceeds to litigation.
If you would like assistance in implementing or assessing your internal grievance policies and procedures, please contact:
Elizabeth Staggs-Wilson, Los Angeles, (213) 633-6800, estaggswilson@dwt.com
Stuart W. Miller, San Francisco, (415) 276-6500, stuartmiller@dwt.com
Emilio G. Gonzalez, Los Angeles, (213) 633-6800, emiliogonzalez@dwt.com